The FSA is telling IFAs they must pay regulatory fees in a single lump sum rather than in monthly instalments.
Under the PIA, firms could pay their regulatory fees by monthly direct debit but the FSA says this would be too costly to administer.
Small IFAs are shocked at the demand and complain that it will hit their cashflow. The FSA says the change has been aired in the consultation process that preceded N2 and that firms should have addressed the issue then.
The FSA, which expects to regulate over 11,000 firms, has ruled out a change of approach this year and says many firms, banks and building societies supported the change.
Kingswood principal Brian Foster says: “I do not recall this from the consultation but I have a business to run. This is like something that Stephen Byers would slip in when no one is looking. They say there is no hidden agenda against one-man bands but that is a cop-out.
“Setting up a direct-debit system is something any small business can do, why can't the FSA?” FSA spokesman Robin Gordon-Walker says: “We are taking on thousands of small firms with low fees, if we start making an exemption the administrative cost could grow. Firms have the chance of getting some credit elsewhere before the fee is due in July if they really need to.”